This is among the possible theoretical explanations of the event on May 14, 2010 when the securities market strongly dove down. The exact same concept can be used to clarify sturdy decreases during securities market collisions.

On May 14, 2010 the US stock exchange dove strongly down by beating all historical records. The DOW Jones Industrials, S&P 500 and other indexes endured massive losses. Some public firms decreased to pennies from $30 and higher. Later on, media described this event as a computer system mistake, then as a human error, than the media revealed that exchanges started to explore this fall and later everybody ignored these uncommon cases. When trying to know events of the plunge it is recommended describing the basics principles of the securities market cost activities. The first and the most fundamental regulation of the stock market is that cost is driven by supply and demand. If a trader (investor) must offer a stock she or he offers it at market value. Now, if an investor must to market 10,000 (10 many thousands) shares of a public firm he needs to find a buyer which would certainly buy these 10 thousand shares. If there is not enough buyers to cover demand to sell ten thousand shares then the price of this stock decreases till there are enough customers to acquire these shares. Of course, the stock exchange runs by billions and 10K is fairly handful which does not significantly have an effect on cost of a stock. The 2nd factor that has to be removed is that there could be 2 circumstances: hand is when a trader intends to sell stocks and second when an investor must to market. In initial case, if cost goes quickly down (plunges) a financier may alter his/her thoughts and choose not to sell yet wait when the traded stock recovers. 2nd situation typically happens when a stop-loss is hit or when a trader has actually gotten a final margin phone call. Whether it is a stop-loss or margin call it is not an investor who places an order to sell but a broker and in this case a position should to be eliminated (closed) at any kind of feasible market price. Now, returning to Could 14, 2010 you could try to think of that during thedecline huge variety of stop-losses was hit. I am not considering circumstance with margin calls considering that in this case, generally, there are many days up until margin is performed. When stop-losses are hit, brokers position orders to cost market value. Now, because of an error in computer, or as a result of human error, as was simply once stated in CNN “driver went into B (Billions) in place of K (thousands)”, or by any other factor there were put orders to sell billions of shares. Since there were no purchasers for such huge quantity of stocks, rate dove down. One significant drop in one stock might generate chain reaction. If this stock is detailed in the indexes (, DJI,, etc) then this stock's decrease drags the indexes down, then various other stocks begins to follow the indexes and afterwards new stop-losses are struck and additional sell orders are put on the marketplace and afterwards all repeats repeatedly and it speeds up into the crash. Kindly keep in mind that over simply a presumption of possible scenario of May 14th events.

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